The Chairman welcomed the Iraqi observer Dr. Mehdi Hafedh, Minister of
Planning and Development Cooperation and stated that the IAMB looked forward
to having
an Iraqi as a full member of the IAMB. In his address, Dr. Hafedh welcomed
the inclusion of an Iraqi member on the IAMB and confirmed their commitment
to cooperate fully with the IAMB.

External Audit of the DFI

A representative from KPMG briefed the IAMB on the on-going audit of the
DFI. He indicated that the audit of the first period ended 31 December 2003
was largely complete, and that the final audit report would be presented
prior to the next IAMB meeting to be held on July 14 - 15. The IAMB resolved
to ensure
that the audit reports and its comments thereon be made public.

KPMG indicated that they had continued to encounter difficulties obtaining
information from the CPA to complete their audit. Responses to queries were
sometimes slow, requiring frequent follow-up, and there seemed to be a high
turnover of key CPA personnel.

The representative from the CPA explained that the provision of information
required coordination with various ministries and gave rise to transportation
and security issues related to movement of KPMG staff to various areas, all
of which cannot always be arranged in a timely manner.

KPMG reiterated its commitment to adhere to the time-line as stated in
the Statement of Work.

KPMG also briefed the IAMB on other issues concerning the audit of the
export sales such as smuggling, barter transactions of export sales of petroleum
and
petroleum products and the payments to the compensation commission.

The invitee from the Iraqi Board of Supreme Audit asked whether the frozen
assets (including those from the neighboring countries) were covered in the
audit. KPMG indicated that only the frozen assets in the DFI would be covered.

Noting the need to address any outstanding issues expeditiously, the IAMB
requested KPMG to keep the IAMB informed on the progress of the audit and
to ensure that the final report of the auditors is ready for review and discussion
at the next IAMB meeting.

Briefing by the CPA

As a follow up to the May 24 -25 briefing provided to the IAMB, the CPA
provided an update on the latest DFI activities.

The CPA briefed the members on the status of the State Oil Marketing Organization
(SOMO). The draft report on the audit of SOMO would be provided to the IAMB
as soon it was finalized. The IAMB regretted the delay in the finalization
of this report and urged the CPA to press for prompt finalization of these
audit reports.

The IAMB was advised that the oil metering contract, which had initially
been reported as having been awarded as a Task Order of an existing contract,
had not been concluded due to security and technical issues. The IAMB was
informed by the CPA that funds have, however, been set aside for the metering
project.
The IAMB noted with regret that contrary to the information it had been provided
by the CPA at its previous meeting, the project for the installation of meters
had been delayed and urged that it proceed without further delay on this
critical issue.

Responding to earlier requests by the IAMB to obtain audit reports regarding
sole sourced contracts, including those by the Defense Contract Audit Agency,
the CPA advised that these reports were still not available.

The IAMB regretted the delay in obtaining these reports, which could have
lessened the need for further audits. It was decided that a special audit
to determine the extent of sole sourced contracts be commissioned. In this
respect,
the IAMB requested the CPA representative to take urgent action on issuing
the request for proposal based on the scope of work already provided by the
IAMB to the CPA.

Post June 30 2004

The IAMB discussed its work following the adoption of the United Nations
Security Council resolution 1546. In light of the new requirements in the
resolution, the IAMB agreed that it would need to amend its terms of reference.
It is expected
that the revised terms of reference will be finalized expeditiously.

The IAMB
also decided to write to the Iraqi Government, requesting it to designate
a full voting member as stipulated in UNSCR 1546 (2004).

The CPA briefed the
IAMB on the preparations for the anticipated hand-over of the DFI and its
operations.

The IAMB decided to request the CPA to designate an official
to act as counterpart to the IAMB in connection with the finalization of
the ongoing audits of the
DFI activities for the period up to 30 June 2004 and to advise the CPA of
the necessity to preserve all records in order to enable the auditors to
successfully
conclude their work.

The Iraqi observers reiterated the need for the international
community to ensure that the immunity on the DFI will continue to apply
after the hand over.

Press Release

The members agreed to issue a press release highlighting the results of this
meeting and to post this press release on the IAMB website.

Other Business

The next meeting of the IAMB has been scheduled for 14-15 July, to be hosted
by the International Monetary Fund.